Food security in focus

There is currently a heated political debate about the impacts on food production of water reforms, the potential introduction of a carbon price and rapid expansion of mining on productive agricultural land.
Photo Nick Moir

by
Sophie Morris

Food production is an activity – like sport – where Australia prides itself on punching well above its weight. It fits with our national image as a self-sufficient land, fed and clothed by farmers who battle the elements each year to ensure there is enough food for domestic consumption and to feed our trade partners.

So when the Australian Food and Grocery Council reported on Wednesday that their industry’s trade balance had swung from surplus to deficit, it was almost as shocking as if Australia had failed to secure a medal at the Commonwealth Games.

Kate Carnell
, the former Liberal chief minister of the ACT who is now the council’s chief executive, says it is “alarming" to see that Australia has become a net importer of food and grocery products.

But the nation’s farmers took affront and their peak lobby group rushed to defend their performance.

The federal government also sought to hose down the furore and point out the limitations of the statistics used in the report.

Innovation, Industry, Science and Research Minister
Kim Carr
, who had been persuaded to launch the council’s report, described Carnell’s comments as “alarmist".

The headline figure from the council’s State of the Industry report was that the industry’s international net trade position fell dramatically from a $4.5 billion surplus in 2004-05 to a $1.8 billion deficit in 2009-10.

It was a potent message at a time of heated political debate about the impacts on food production of water reforms, the potential introduction of a carbon price and rapid expansion of mining on productive agricultural land.

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These debates have long been simmering but have found high-profile advocates in the likes of independent MP
Bob Katter
, whose pet subject is the decline of food production in Australia and the vulnerability of farmers in international markets.

Nationals senator and Coalition water spokesman
Barnaby Joyce
also seized on the report, saying it reveals that it is “not beyond our nation’s capacity to remove one of our greatest strengths, that is, to feed ourselves and others".

“We really are facing a scenario where Australia really won’t manufacture much at all in this space. The majority of products will come in from overseas."

She went on to warn that mounting pressures on the industry – including the rising costs of power, staff, transport, government regulation and drought – could force manufacturers offshore, threatening 300,000 jobs.

National Farmers Federation president
David Crombie
has spent much of his four years at the helm of the lobby group talking up the performance of agriculture and its potential for further expansion as global demand for food grows.

He says it is “misleading" to describe Australia as a net food importer.

“It’s a matter of definition.The membership of AFGC are basically food manufacturers and distributors," he says.

“It relates to a small part of the food trade. All it refers to is packaged, manufactured food – biscuits and things.

“What it ignores is the very substantial exports of beef, sheep meats, grain, sugar and dairy products, which are really the lion’s share of what Australia produces."

When these are taken into account, Carr says there’s no disputing the fact that Australia still has a net food trade surplus, exporting around $24 billion of food products in 2009-10, compared with $10 billion of imports. He points out that the figures contained in the AFGC report are not limited to food products, but include a range of sanitary and pharmaceutical items, such as soap and nappies.

Indeed, in the food and beverage category of the report, Australia was still a net food exporter, to the tune of $6 billion, although the value of exports has dipped significantly in the past year as the dollar strengthened.

The report notes that, far from going backwards, there has been growth in recent years in the value-add in the fruit and vegetable manufacturing and dairy product manufacturing industries.

The value of exports of fresh produce is also still well ahead of imports. The trade deficit was in groceries, which are dominated by medicinal and pharmaceutical products, not food.

Also, the AFGC figures are based on value of trade, which is vulnerable to fluctuations in exchange rates and prices.

By volume, the Australian Bureau of Agricultural and Resource Economics says Australia exports around 53 per cent of its food production, dominated by grains, meat, dairy, wine and sugar.

These figures suggest Australia’s future as a net food exporter is guaranteed for years to come.

However, there are some categories – notably seafood, and processed fruit and vegetables – where Australia is already a net importer, with the value of imports outstripping exports.

The AFGC report gained such traction in the past week because it touched a nerve of concern about food security and food prices, particularly as irrigators in the Murray-Darling Basin warn that the foodbowl could be at risk if their water supplies are significantly reduced.

The report also highlights some of the issues confronting the manufacturing sector more broadly and the related concern that Australia may lose the ability to value-add to its raw production in food, as in other sectors.

Carr says competitor nations may have the edge in low-value, low-tech, labour-hungry manufacturing, meaning Australia must build competitive advantage in high-value, high-productivity, and research-intensive segments instead. “There is a growing need for food internationally. There’s huge export opportunities for us. The question is: can we rise to meet this challenge? To do that we need to attract new investment," Carr says.

He acknowledges the food industry is particularly vulnerable to some of the challenges arising from climate change, for instance reduced water availability, and energy pricing issues.

To confront these issues, he says he is setting up a food industry strategy group, bringing together food scientists from universities and the CSIRO with unions and employers across the supply chain.

Their work will contribute to the development of the national food plan promised by the former agriculture minister Tony Burke during the election campaign and supported by the Greens.

The development of this plan is supposed to take a “paddock to plate" approach to shoring up the quality, affordability and sustainability of food supplies.

When he announced it in August, Burke made it clear it would have a heavy focus on reviving food manufacturing.

“The bulk of our processed food is still imported," he said at the time. “I want us to take the same strategic approach to food manufacturing that we have been able to take to the car industry.

“Unless we are able to get food manufacturing going again in Australia, the import-export figures . . . it’s hard to see them getting anything but worse."

He said the current system of grants for manufacturing were like a “raffle", and the grants didn’t necessarily go where they were needed most.

Carnell has used the AFGC report to argue that her members are not asking for handouts, but just want a supportive regulatory environment, which allows food processors and manufacturers to compete with other countries.

Putting aside the real challenges to manufacturing in Australia, there are valid questions around how our farmers will continue to supply the raw materials for food production.

The current proposals to reduce the volume of water available for irrigation mean that, in the long-term, farmers in the Murray-Darling Basin – who have annual production worth about $15 billion, over a third of which is from irrigation – will need to do more with less.

And, even with productivity and efficiency gains, if the proposals are adopted, it is unavoidable that there will be a drop in production of irrigated crops such as rice and cotton, and to a lesser extent, dairy and horticulture.

Their output has already suffered through the severe drought of the past eight or nine years, when irrigators often received only a fraction of their normal annual water allocation.

The concern is that the lower levels of production of recent years – when the rice industry produced its smallest crop in decades – could become entrenched as the government buys up farmers’ water entitlements for the environment.

Even through the severe drought, Australian farmers produced far more food than the population of 22.5 million could ever consume.

While food prices in our supermarkets shift with global supply and demand, it is hard to imagine this nation could ever be gripped by the sort of panic about food supplies that sparked riots in less fortunate countries at the height of anxiety about food security two years ago.

Harder even than to imagine our athletes ever ending up at the bottom of the Commonwealth Games medal tally.